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Boston College Expert: Legalization of Marijuana

(11-7-13)

Marijuana is slowly knocking down the doors of illegality and is gaining acceptance in this country, if Tuesday’s elections results are any indication, as voters in one state passed a regulatory tax on the drug, while voters in several other cities said it was OK to use small amounts of it.

“It does hit you that people are tolerating marijuana much more – they don’t see it that much different than alcohol,” says Boston College Carroll School of Management Adjunct Associate Professor of Finance Fr. Richard McGowan, S.J, a nationally recognized expert on the tobacco and alcohol industries. “There’s still a debate whether marijuana is a gateway to other drugs. With these votes, I think people don’t take that argument seriously anymore.”

Voters in three Michigan cities approved legalization of up to an ounce of marijuana by adults on private property while those in Portland, Maine gave thumbs up to people over the age of 21 possessing up to 2.5 ounces. But Father McGowan sees potential law enforcement nightmares down the road.

“When someone is impaired by marijuana use, how do police test for that?” says Father McGowan, who has researched and written extensively on the subject of marijuana. “With alcohol, you have the Blood Alcohol Content (BAC), but I don’t think there is the equivalent for that right now. How do you test for someone who is driving high?”

In Colorado, one of two states where marijuana use is legal, voters approved an excise tax on the wholesale price, and an additional 10 percent sales tax on its retail price.

“Colorado doesn’t make sense in taxing all marijuana the same,” says Father McGowan. “You would think you would add a Value Added Tax to it – as the quality goes up, you pay more, just like you do with distilled spirits.”

McGowan also points out the high tax rate may encourage buyers to purchase it off the street, rather than from state approved vendors.

“I think there are people who would rather buy it from a state dealer than a street dealer,” says Father McGowan. “But I would think the state’s goal is to put the dealer out of business. If you tax it at the 25% rate, it hits me that you’re probably doing the dealers a favor by taxing it that high. They can undercut the price because they’re never going to pay that tax.”

Washington is the other state that has legalized marijuana while Massachusetts, New Jersey, and California allow marijuana for medicinal use. But Father McGowan says that kind of conditional use could lead to abuse in some cases.

“I have a feeling doctors will be pressured by their patients,” says Father McGowan. “I can easily see a medical doctor doing the calculus and deciding a patient getting high on pot is safer than one getting drunk with alcohol. There will be patients pressuring their doctors, and the doctors won’t want to lose those patients, so they’ll try and make them happy. It doesn’t justify it but it certainly happens.”

Professor McGowan is a nationally recognized expert on legalized gaming, tobacco and alcohol industries. He has done extensive research on the privatization process as well articles on the legalization of marijuana. His upcoming book, The Tale of Two Sins: Gambling and Tobacco, will focus on how these two industries have fared very differently in the eyes of public policy makers.